Question
The interest earned on investing Rs. 6000 for 2 years at
the rate of 8% p.a., compounded annually, is used to purchase an article. If the article is later sold at 25% profit, then find the selling price of the article.Solution
Compound interest earned = 6000 × {1 + (8/100)}2 – 6000 = 6998.4 – 6000 = Rs. 998.4 So, selling price of the article = 998.4 × 1.25 = Rs. 1248
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